Question

When a new partner brings goodwill in Cash, it is credited to ______.

Options

• His Capital A/c

• Sacrificing Partner’s Capital A/cs

• Old Partner’s Capital A/cs

• All Partner’s Capital A/cs

Answer 1

When a new partner brings goodwill in Cash, it is credited to Sacrificing Partner’s Capital A/cs.

Explanation:

When a new partner pays a premium for goodwill in cash, the amount is specifically distributed among only those old partners who have sacrificed their share of profit to accommodate the new partner. The credit compensates them for the loss of their future profit share. It is not credited to all old partners if some didn’t sacrifice, nor is it credited to the new partner’s account.